Delta exec expected to leave
Jim Whitehurst, a top executive and an architect of the airlines' turnaround, will likely exit now that he's been passed over as CEO, writes Fortune's Matthew Boyle.
(Fortune Magazine) -- When Delta Air Lines named board member Richard Anderson as its new CEO Tuesday, speculation mounted that it would soon lose a major architect of its ongoing turnaround.
Industry experts say that Jim Whitehurst, Delta's COO and an internal candidate for the CEO job, is expected to leave the company now that he's been passed over for the top post.
"Whether he's gone today or tomorrow, he's gone," said Jeremy Garlington, publisher of The Garlington Report.
A Delta spokeswoman and Whitehurst declined to comment late Tuesday.
Whitehurst, 38, is widely credited with spearheading the airline's customer service and international expansion strategies.
A former director at Boston Consulting Group who joined Delta (Charts, Fortune 500) in 2002, Whitehurst is perhaps best known for developing the Velvet Rope Tour, a risky multi-million dollar effort to restore confidence among its thousands of flight attendants.
The program has begun to pay dividends. Delta earned the No. 2 spot in customer satisfaction among traditional carriers in North America in the J.D. Power and Associates 2007 Airline Satisfaction Index Study.
Industry consultants said that losing Whitehurst would be a big blow to Delta, which came out of bankruptcy earlier this year. "He is the familiar face to a lot of employees," says Michael Miller, a partner at aviation consultancy The Velocity Group. "That, to me, is a negative."
Anderson's ascension to the CEO post also raises questions regarding his impartiality during the search process, according to Garlington, a leadership consultant.
Anderson reportedly was not present for interviews of internal candidates, "which would suggest, at least perceptually, that Anderson was in it for the CEO job all along," Garlington said.
Delta CFO Edward Bastian, who today was promoted to president while retaining his current duties, was the other internal candidate for the top job.
Anderson is currently president of the commercial services unit at UnitedHealth Group (Charts, Fortune 500) and was named to Delta's board earlier this year. Prior to UnitedHealth, he was CEO of Northwest Airlines (Charts, Fortune 500), the nation's fifth-largest carrier. Northwest entered bankruptcy on the same day as Delta in 2005.
While it might seem strange for a sitting board member to move into the CEO slot, it's happened before at Delta. Gerald Grinstein, Delta's CEO since January 2004, has been a director of Delta since 1987, when his Western Airlines merged with Delta.
Anderson's appointment will also surely rekindle rumors of a Delta-Northwest merger, but Miller dismissed such talk.
"You need to have your house in order first," he said. Among Delta's challenges are ensuring that its expanded offering of 60 new international flights remains profitable, and dealing with an aging fleet of MD80 aircraft.